OCBC strategists Christopher Wong and Sim Moh Siong describe South Korean Won’s (KRW) initial strength and subsequent retracement as broader risk aversion resurfaced. The Bank of Korea’s decision to hold rates at 3% while retaining a tightening bias and calling KRW undervalued is seen as supportive. They expect further KRW recovery but prefer buying on dips, citing unsettled global technology sentiment and Oil prices as key risks.

BOK support but risk sentiment key

“KRW initially strengthened but subsequently pared gains overnight amid broader risk aversion. The BoK’s policy guidance had provided some support.”

“While the decision to hold rates at 3% was widely expected, the central bank retained its tightening bias amid resilient growth and still-elevated inflation.”

“Governor Shin’s assessment that KRW remains undervalued also offered some reassurance. The currency’s earlier resilience despite the equity selloff was also notable, although the overnight retracement suggests that global risk sentiment remains an important driver.”

“We see room for further KRW recovery, supported by the BoK’s tightening bias and Korea’s strong export performance. However, we would be cautious about extrapolating recent gains while global technology sentiment remains unsettled.”

“A continued recovery would be more convincing if foreign equity selling moderates. For now, we favour buying KRW on dips rather than chasing strength, with oil prices and global technology sentiment remaining key risks.”

“Daily momentum is not indicating a clear bias while decline in RSI moderated. 2-way trades likely. Support at 1320. Resistance at 1335, 1343 (21 DMA). Sell rallies preferred.”